Transcript Form 1099-Misc Reporting Workshop

Thursday, November 3, 2011
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Monday, January 2, 2012
Allow W-2 & 1099-Misc changes
Friday, January 13, 2012
Last day for W-2 & 1099 adjustments
Thursday, January 26, 2012
W-2 & 1099 forms to districts
January 27, 2012 thru February 10, 2012
W-2 & 1099 corrections to ICOE
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Who needs a W-9?
 Entities that require a 1099-Misc are required to furnish a
taxpayer ID number (TIN)
 Individuals/Sole Proprietors
 Limited Liability Partnerships (LLP’s)
 Attorneys
 Health & Medical Services
 Exempt Organizations
 Utilities
 Government Entities
 Corporations (other than attorneys and Health & Medical)
 Limited Liability Corporations
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Information needed when hiring Vendors
 Districts may choose to require a W-9 Form from every vendor as
their internal procedure
 The W-9 Form should be collected from every vendor that should
receive a Form 1099-Misc
 The TIN can be obtained verbally or on a W-9
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Types of Payments
 File a 1099 Misc for each non-corporation vendor
who has been paid:
 At least $600 in rents & services
 At least $10 in royalties or tax-exempt
interest
 Medical & health care or attorney vendors may be a corporation,
but still need to be reported on a 1099 Misc if paid at least $600
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Payments Exempt from 1099-Misc Reporting
 Payments for merchandise, telephone, freight or storage
 Payments of rent to real estate agents
 Wages paid to an employee
 Business travel allowances paid to employees (may be reported on
W-2)
 Payments made to tax-exempt organization
 Corporations except for medical/health services & legal services
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When can a worker be an independent
contractor?
 The right to direct/control how work is done
 Instructions or training, benefits
 Control how business aspects or activities are conducted.
 Reimbursed expenses, travel, supplies, postage, salaries
 Retirees working as Independent Contractor
 If a “retired” worker is performing duties that have been established as
“Employee positions”, then the worker is most likely being directed by
the employer and would have to be hired as a returning employee---not
and independent contractor
 Please note you must file a DE 542 for payments made to an
independent contractor during the year when you pay them over
$600 or enter into a contract for over $600. These are due within
20 days of payment/contracting to EDD.
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Reporting of Deceased Employee Wages
 Report on 1099 the accrued wages, vacation pay & other
compensations paid after the date of death to the estate or
beneficiary
 Report this number in Box 3 on 1099-Misc
 If the amount is going to a beneficiary, you will need the beneficiary’s
tax ID number
 If the amount is going to an estate, you must obtain the TIN of the
estate or backup withhold on the payment
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Districts are required to withhold taxes from
payments in the following situations.
1.
2.
3.
TIN problems
California Non-Resident
Foreign Vendors
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Withholding - TIN
• Vendors may be subject to a 28% federal withholding if:
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Vendor paid $600 or more and has not provided a Taxpayer
Identification Number (TIN)
IRS notifies you to withhold because of an incorrect TIN
previously filed (“B” notice)
• 7% state withholding also applies

report and remit backup withholding to FTB with Form 592
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Depositing Back-up withholding to IRS
 Can file electronically or by federal tax deposit coupon, Form 8109
 If backup withholding is less than $1,000 you may make the deposit
with your annual Form 945 Filing
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Withholding – Non-Resident
• Payments made to California non-residents, including
corporations & partnerships without a permanent place of business
in California may be subject to a 7% state income tax withholding
• Have vendor fill out Form 590 to determine California residency
• Withhold 7% (for payments more than $1,500 in calendar year)
unless you receive a California Non-Resident Withholding Waiver
before processing a payment
• If you know vendor payments will total more than $1,500, withhold
with the first payment.
• If you reasonably believed the vendor would not exceed the $1,500
threshold- do not go back and withhold on prior payments.
• If withholding occurs, a Form 587 must also be completed
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Withholding - Foreign vendors
 If a foreign vendor only supplies you with material goods or performs
services for you outside the United States, no reporting or tax
withholding is required
 If a foreign vendor is compensated for services for you performed in
the United States, they may be subject to a 30% federal tax
withholding
 Complete a W-8, instead of W-9
 Submit a 1042S, instead of 1099-MISC
 All foreign vendors must still have a U.S. taxpayer i.d. (ITIN)
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1099 Box Instructions
 Box 1 –
 Rents

Enter amount paid for rents, such as office space, machine rentals
 Box 2 –
 Royalties (before reduction for fees, commissions or expenses)
 Box 3 –
 Other Income
 Prizes & awards, punitive damages, liquidated damages, deceased employee’s wages
 Box 4 –

Federal Income Tax

enter back up withholding on vendors who have not furnished a TIN
 Box 6 –

Medical & Health Care Payments

$600 or more for services
 Box 7 –

Nonemployee Compensation

payments of $600 or more for professional fees, service fees, attorneys fees, accountants,
etc
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Examples of Non-Employee Compensation –
Box 7
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Accounting services
Advertising
Appraisal services
Attorney fees
Auto repair
Construction
Consultant fees
Custodial/Maintenance
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Engineering services
Landscaping services
Locksmiths
Photographers
Printing services
Referees
DJ’s
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1099 Box Instructions - continued
 Box 14
 Gross proceeds paid to an attorney in connections with legal settlements
 Box 15
 you may use to provide any other information to the recipient
 Box 16, 17, 18
 report CA 7% withholding, if applicable
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Manual Adjustments
• District may need to make adjustments to the vendor for the following
reasons
• Vendors paid out of ASB accounts. Need to be combined with
district totals. Example; the district paid vendor XY $200.00
and the school’s ASB paid XY $400.00, then a 1099 is
required since they meet the $600.00 threshold.
• District payments made to vendor through their credit cards
or revolving cash accounts. If vendors should receive a 1099
due to the type of services provided you will need to manually
create one since they do not have a vendor number associated
with the payment.
• Potential problem with using a credit card or revolving
cash for these types of payments- If the District does not
get a TIN number they are responsible to pay the 28%
backup withholding.
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Verify 1099 PrelistNo later than Friday, January 13, 2012
• District is responsible for checking 1099 Prelist in ICSIS by deadline
• District must confirm via email to Kristy Curry ([email protected])
that Prelist is correct and 1099’s are ready to print by the deadline
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Correcting 1099’s
(during correction window of 1/27/11 – 2/10/11)
• Make sure when correcting a 1099-Misc, check the Corrected box at
the top of the form
• If you are deleting a reported 1099, check the Void box at the top of
the form
• District is responsible for sending in corrected 1099’s along with the
1096 Transmittal Form
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Correcting 1099’s
(After 2/10/11)
• You will need to manual fill at a form 1099. These forms must be
ordered from the IRS website or picked up from the local IRS office.
They cannot be printed from the website
• You also need to fill out at 1096 form to attach to the 1099. For further
information on manual corrections see the IRS website
• http://www.irs.gov/pub/irs-pdf/f1099msc.pdf
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